Ocean giant issues results downgrade
23 / 10 / 2015
Airfreight’s largest modal competitor, deep sea container shipping, is feeling the pinch.
Danish ocean freight giant AP Moller-Maersk, has today issued a 2015 results adjustment after “market conditions worldwide have been weaker than the group expected”.
AP Moller-Maersk said that its boxship division, Maersk Line, saw that the container shipping market “deteriorated beyond the group’s expectations, especially in the latter part of the third quarter and October”.
The group now expects “no market recovery within 2015,” adding that “initiatives have been taken to adjust Maersk Line’s network accordingly”.
By comparison, the latest IATA quarterly survey of business confidence indicated that airfreight volumes during the past three months were "broadly unchanged" compared to a year ago. This is a slowdown on previous quarters, and aligns with developments in FTK data.
However, the outlook for air cargo volumes “remains positive”, but fewer respondents (50%) now expect gains in the year ahead compared to the January survey (71%), which was the 2015 peak of respondents’ optimism for cargo growth.
“Expectations have weakened on the back of slower growth in world trade throughout the first half – with large declines in key markets,” said IATA.
At a time when airfreight rates are experiencing downward pressure, the same effect is being felt by Maersk Line.
In the third quarter, Maersk Line achieved an average freight rate of $2,163 per forty ft box equivalent (FFE), versus $2,679 a year earlier, and carried 2,427,000 FFE in the third quarter of this year, down from 2,401,000 FFE last year, both of which were “lower than expected”.
AP Moller-Maersk said: “The group’s sensitivity guidance for the last six months of 2015 states that a general decline in the freight rate of $100 per FFE will impact Maersk Line’s result negatively by around $0.5bn and that a volume reduction of 100,000 FFE will impact Maersk Line’s result negatively by around $0.1bn.”
AP Moller-Maersk’s group preliminary result for the third quarter is $778m. with an underlying result of $662m. The preliminary result for the first nine months is $3.4bn, with an underlying result of $3.08bn.
The group’s previous expectation announced in the second quarter was for around $4bn, based on an underlying result contribution from Maersk Line above $2.2bn.
AP Moller-Maersk group’s new expectation is around $3.4bn, with Maersk Line contributing around $1.6bn. All other business units, including the Damco freight forwarder, “maintain their result guidance”.